In many commercial real estate markets throughout the United States, traditional shopping malls are no longer as popular as they once were and are impacting the landscape of commercial real estate. Many, in fact, are now being replaced by a new trend known as lifestyle centers. The primary difference between lifestyle centers and malls is the easy access to shops that lifestyle centers offer to consumers. With the traditional retail mall setup, customers must park, often at quite a distance, and then walk to the entrance of the mall.
By comparison, lifestyle centers make it possible for customers to park directly outside the shop. While the traditional shopping mall typically offered a blend of price points designed to appeal to consumers of various budgets, this is not the case with lifestyle centers, which typically focus on providing shoppers with better quality and frequently higher-end retail shopping options. Whereas traditional shopping malls typically embraced the use of anchor stores, the exact opposite has often proven to be true with lifestyle centers.
While there are decided differences between the two approaches, it seems that lifestyle centers are now the favored option. Recent data indicates that investment sales for lifestyle centers reached nearly $2 billion a year to date. Investors are particularly drawn to the ideal of lifestyle centers, especially those located in urban areas with large populations and warm climates. During the last several years, vacancy rates for enclosed shopping malls have increased, rising from 5.3 percent in 2000 to 8.3 percent during the first quarter of 2013.
Investors targeting lifestyle centers as investment vehicles are usually less concerned with the actual size of the property than they are with the price point. Other factors also frequently figure into consideration when it comes to investing in lifestyle centers, including the location within an urban area. In particular, investors want to ensure that the location is situated near an area with high-income consumers.
Lifestyle centers have not been without their share of challenges. During the early years of development, many developers of lifestyle centers struggled by offering many co-tenancy clauses to tenants. Under such clauses, stores were able to retain the option to leave if their neighboring retailers left. If one tenant left, the entire property could be easily undermined.
Moving forward, developers have worked to overcome such challenges by adapting various elements of lifestyle centers to make them more attractive to tenants, according to commercial real estate news. For instance, some lifestyle center developers have revised the mix of retail offerings to attract middle-income consumers as well as high-income shoppers. Additionally, while lifestyle centers once eschewed the presence of anchor stores, that is no longer necessarily the case as lines are now blurred more frequently. Although there has been significant discussion regarding whether a lifestyle center can still qualify as such if it contains an anchor store, some developments have embraced the concept of an anchored lifestyle center. In some areas, retailers such as L.L. Bean and Best Buy are taking up residence in lifestyle centers. Even grocery stores are now joining such developments.
Want real estate news on-the-go? Download our NEW mobile app today!